Is The 'Force' With Disney

Not enough to beat the blackhole of sports entertainment

Coming out in December will be the new episode of 'Star Wars' and it will be a box-office bruiser which will easily reach the $1 billion+ mark on its way to being, perhaps, the biggest grosser in film history.  Unfortunately, for Disney, 'The Force Awakens' (no matter how successful) will not have an impact on its share price - which has been tumbling as of late.  Problem: Disney is in a blackhole, and its not in outer space but in the universe of sports entertainment.

Disney's profit breakdown is as follows: Consumer Products - 37%, Broadcasting - 22%, Parks and Resorts - 16%, Studio/Film Entertainment - 11%, Media Networks, Interactive - 5%, all Other - 10%, and Cable TV - (1%).

Disney is the preeminent deliverer of live sports entertainment via ESPN and its cable revenue is tumbling.   Although it has tremendous revenue drivers via intellectual properties, such as 'Star Wars' and 'Marvel' it is losing money in the blackhole of sports entertainment. Disney needs to take ESPN's sports content and move it to an 'over-the-top' pay-per-view model - however  this is proving to be more difficult then exploding a 'death star'. 

Disney has inked contracts in the tens of billions with major sports leagues which necessitates charging high 'view fees' to watch sporting events, problem is Disney has contractual obligations with its cable TV affiliates which are set in stone.

Disney is in the process or re-negotiation with its cable partners but, as one can imagine, this will be slow going. In the meantime, Disney will flounder and 'the Force' will not be with it.